Last Updated January 24, 2005
MicroLoan Program
Providing short-term loans for financing inventory; buying equipment, machinery, and fixtures; seeking leasehold improvements; providing working capital; or receiving technical assistance
The MicroLoan Program of the Small Business Administration was developed to make more very small loans available to prospective small business borrowers. Under this program, the SBA makes funds available to nonprofit intermediaries, who in turn make loans to eligible borrowers.
Project Examples
Client confidentiality does not permit the SBA
or nonprofit lenders to release information to
the public on specific projects.
Application and Financial Information
Loans are made by selected nonprofit lenders
in amounts up to a maximum of $35,000. The
average loan size is $12,300. Each nonprofit
lending organization has its own loan requirements.
Generally, lenders will take collateral
against a loan. In most cases, the personal guaranties
of the business owners are also required.
Depending on the earnings of the business, the loan maturity may be as long as 6 years. Rates for microloans are determined by the intermediary's cost of funds and the size of the microloan.
Eligibility, Uses, and Restrictions
Virtually all types of for-profit businesses that
meet SBA basic requirements are eligible.
Lending decisions under this program are made
solely by the intermediary lender. They are
based on credit experience, character, and/or
relationships built during the preloan technical
assistance and training.
Loans may be used for furniture, fixtures, supplies, inventory, machinery, equipment and working capital. Loans may not be used as a down payment or for the purchase of real estate. The MicroLoan Program is a relatively new program. It is available in most areas of the country.
Contact
Check the telephone directory under "U.S.
Government" for the nearest SBA office or call
the Small Business Answer Desk (800) U-ASKSBA.
For the hearing impaired, the TDD number
is (704) 344-6640.
Internet
SBA Home page:
www.sba.gov
SBA Microloan Program:
www.sba.gov/financing/sbaloan/microloans.html
